The Council of the Law Society of New South Wales ('the Council') has applied, by the filing of an Application for disciplinary findings and orders ('the Application'), for orders against Mr Ip, who is not an Australian legal practitioner, under s 119(1) of the Legal Profession Uniform Law (NSW) ('the Uniform Law').
The Council's application was supported by the affidavit of Mr Thong, a Trust Account Investigator employed by the Council, who provided a helpful and thorough report.
The Council and Mr Ip have jointly submitted an Agreed Statement of Facts to the Tribunal, and Mr Ip has agreed that the orders sought by the Council are appropriate.
As is the case in relation to disciplinary proceedings which concern a legal practitioner under the Uniform Law, even though the relevant facts have been agreed and Mr Ip does not contest the orders sought, the Tribunal must be satisfied that it is appropriate to make the orders sought (see Council of the Law Society of New South Wales v Jafari [2020] NSWCA 53 at [3]).
The Council seeks an order under s 119 of the Uniform Law disqualifying Mr Ip indefinitely from being a lay associate.
[2]
The Uniform Law
The Uniform Law provides in s 119, relevantly, as follows:
119 Disqualification of individuals (other than practitioners)
(1) The designated tribunal may, on the application of the designated local regulatory authority, make an order disqualifying a person who is an individual (other than an Australian legal practitioner) for the purposes of this Law, for a specified period or indefinitely, if satisfied that -
(a) a ground for making the order under this section has been established (see subsection (2)); and
(b) the disqualification is justified.
(2) Any of the following are grounds for disqualifying a person -
(a) …
(b) that the person is not a fit and proper person to be employed or paid in connection with the practice of law or to be involved in the management of a law practice;
(c) …
(d) that the person has been guilty of conduct that, if the person were an Australian legal practitioner, would have constituted unsatisfactory professional conduct or professional misconduct;
(e) …
(3) The designated tribunal, on application by the person and with the leave of the tribunal, or by the designated local regulatory authority, may vary or revoke an order if it considers it appropriate to do so.
(4) An order to a similar effect made by a corresponding authority of another jurisdiction under a corresponding law applies in relation to this jurisdiction in the same way as it applies in relation to that other jurisdiction and as if it had been made by the designated tribunal.
Council of the Law Society of New South Wales v Ip [2023] NSWCATOD 157 | Case summary | Zoe
In this matter, the grounds for the application are, firstly, that Mr Ip is not a fit and proper person to be employed or paid in connection with the practice of the law or to be involved in the management of a law practice under s 119(2)(b) of the Uniform Law and, secondly, that he is guilty of conduct that, if he were an Australian legal practitioner, would have constituted unsatisfactory professional conduct or professional misconduct under ss 119(2)(d), 296, 297 and 298 of the Uniform Law.
The Uniform Law provides, in ss 296, 297 and 298:
296 Unsatisfactory professional conduct
For the purposes of this Law, unsatisfactory professional conduct includes conduct of a lawyer occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer.
297 Professional misconduct
(1) For the purposes of this Law, professional misconduct includes -
(a) unsatisfactory professional conduct of a lawyer, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence; and
(b) conduct of a lawyer whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law that would, if established, justify a finding that the lawyer is not a fit and proper person to engage in legal practice.
(2) For the purpose of deciding whether a lawyer is or is not a fit and proper person to engage in legal practice as referred to in subsection (1)(b), regard may be had to the matters that would be considered if the lawyer were an applicant for admission to the Australian legal profession or for the grant or renewal of an Australian practising certificate and any other relevant matters.
298 Conduct capable of constituting unsatisfactory professional conduct or professional misconduct
Without limitation, the following conduct is capable of constituting unsatisfactory professional conduct or professional misconduct -
(a) conduct consisting of a contravention of this Law, whether or not -
(i) the contravention is an offence or punishable by way of a pecuniary penalty order; or
(ii) the person has been convicted of an offence in relation to the contravention; or
(iii) a pecuniary penalty order has been made against the person under Part 9.7 in relation to the contravention;
(b) …
(c) conduct involving contravention of the Legal Profession Uniform Law Act of this jurisdiction (other than this Law), whether or not the person has been convicted of an offence in relation to the contravention;
…
'Controlled money' is defined in s 128 of the Uniform Law as follows:
128 Definitions
(1) In this Law -
…
controlled money means money received or held by a law practice in respect of which the law practice has a written direction to deposit the money in an account (other than a general trust account) over which the law practice has or will have exclusive control;
'Trust money' is defined in s 129(1) of the Uniform Law as follows:
129 Meaning of trust money
(1) For the purposes of this Law, trust money is money entrusted to a law practice in the course of or in connection with the provision of legal services by the law practice, and includes -
(a) money received by the law practice on account of legal costs in advance of providing the services; and
(b) controlled money received by the law practice; and
(c) transit money received by the law practice; and
(d) money received by the law practice, that is the subject of a power exercisable by the law practice or an associate of the law practice, to deal with the money for or on behalf of another person.
The Uniform Law provides, in ss 138 and 139:
138 Holding, disbursing and accounting for trust money in general trust account
(1) Except as otherwise provided in this Part, a law practice must -
(a) hold trust money deposited in the law practice's general trust account exclusively for the person on whose behalf it is received; and
(b) disburse the trust money only in accordance with a direction given by the person.
Civil penalty: 50 penalty units.
(2) Subsection (1) applies subject to an order of a court of competent jurisdiction or as authorised by law.
(3) The law practice must account for the trust money as required by the Uniform Rules.
Civil penalty: 50 penalty units.
139 Controlled money
(1) As soon as practicable after receiving controlled money, a law practice must deposit the money in the account specified in the written direction relating to the money.
Civil penalty: 50 penalty units.
(2) The law practice must hold controlled money deposited in a controlled money account in accordance with subsection (1) exclusively for the person on whose behalf it was received.
Civil penalty: 50 penalty units.
(3) Subject to a court order or as authorised by law, the law practice that holds money deposited in a controlled money account must not disburse the money except in accordance with -
(a) the written direction relating to the money; or
(b) a later written direction given by or on behalf of the person on whose behalf the money was received.
Civil penalty: 50 penalty units.
(4) The law practice must maintain the controlled money account, and account for the controlled money, as required by the Uniform Rules.
Civil penalty: 50 penalty units.
(5) The law practice must keep a written direction mentioned in this section for 7 years.
Civil penalty: 50 penalty units.
(6) The law practice must ensure that the controlled money account is used for the deposit of controlled money received on behalf of the person referred to in subsection (2), and not for the deposit of controlled money received on behalf of any other person, except to the extent that the Uniform Rules otherwise permit.
Civil penalty: 50 penalty units.
(7) The Uniform Rules may make provision with respect to the receipt of controlled money, the establishment and maintenance of controlled money accounts, the withdrawal of controlled money, and the keeping of registers of controlled money.
The Uniform Law provides, in ss 145 and 146:
145 Protection of trust money
(1) Money standing to the credit of a trust account maintained by a law practice is not available for the payment of debts of the law practice or any of its associates.
(2) Money standing to the credit of a trust account maintained by a law practice is not liable to be attached or taken in execution for satisfying a judgment against the law practice or any of its associates.
(3) This section does not apply to money to which a law practice or associate is entitled.
146 Intermixing money
A law practice must not mix trust money with other money unless authorised to do so by the designated local regulatory authority, and only in accordance with any conditions the designated local regulatory authority imposes in relation to that authorisation.
Civil penalty: 50 penalty units.
The Uniform Law defines 'lay associate' and 'associate' in s 6(1):
associate of a law practice means a person who is one or more of the following -
(a) a principal of the law practice;
(b) a partner, director, officer, employee or agent of the law practice;
(c) an Australian legal practitioner who is a consultant to the law practice;
…
lay associate of a law practice means a person who is not an Australian legal practitioner and who is -
(a) an associate of the law practice; or
(b) a consultant to the law practice (however described) who provides services related to legal services to the law practice, other than services of a kind specified in the Uniform Rules for the purposes of this definition; or
(c) a person who shares the receipts, revenue or other income arising from the law practice;
[3]
The allegations and the agreed facts
At all relevant times, Mr Ip was a qualified accountant and member of CPA Australia. From 15 December 2017 to 9 February 2022, he was a registered tax practitioner.
Mr Ip has never been an Australian legal practitioner. He was, however, a director and shareholder of Onward Legal, a law practice. His role in that law practice would also come within the definition of 'lay associate' in the Uniform Law.
Mr Ip admitted all of the allegations against him in his Reply.
We set out the Agreed Statement of Facts below. All of the facts alleged in the Application for disciplinary findings and orders are agreed.
AGREED STATEMENT OF FACTS
DEFINITIONS
ANZ Savings Account means the ANZ Bank bank account operated by Onward Legal with an account number ending in 888.
ANZ Trust Account means the ANZ Bank bank account operated by Onward Legal with an account number ending in 023
APFD means the company named Australian Property Funding Development Pty Ltd with ACN 165397839.
AR means the company named Ausunland Realty Pty Ltd with ACN 169430077.
BIC means the company named Benson Investment Consultants Pty Ltd with ACN 102327953.
Botany Project means the development of units located at 1084-1088 Botany Road, Botany, NSW by APFD.
Controlled Money Accounts means various controlled money accounts, which were operated by Onward Legal.
EMIE means the company named Elite Migration & International Education Services Pty Ltd with ACN 116152071.
First EMIE Account means the ANZ Bank bank account operated by EMIE with an account number ending in 184.
Mr Lu means Mr Wen Tao (also known as Nathan) Lu.
Mrs Ip means Mrs Yuk Ting Ip.
Onward Legal means the incorporated legal practice known as Onward Legal Pty Ltd with Law Society of NSW Practice ID No. 25704.
OS means the company named Ozzy States Pty Ltd with ACN 64128112498.
Parramatta Project means the development of properties located at Parramatta NSW by PRED.
PRED means the company named Parramatta Real Estate Development Pty Ltd with ACN 621321266.
Pymble Project means the development of units located at 1A-1C Orinoco Street, Pymble, NSW by SAD.
Respondent means Mr Eric Shu-Wah Ip.
SAD means the company named Skyland Australian Developments Pty Ltd with ACN 168008571.
Second EMIE Account means the ANZ Bank bank account operated by EMIE with an account number ending in 305.
SRG means the real estate agency known as Sydney Realty Group.
THHM means the company named Tweed Heads Hotel Management Pty Ltd with ACN 168535402.
Uniform Law means the Legal Profession Uniform Law (NSW).
Westpac Cash Account means the Westpac Bank bank account operated by Onward Legal with an account number ending in 490.
Westpac Trust Account means the Westpac Bank bank account operated by Onward Legal with an account number ending in 503.
[4]
The Respondent:
a. at all relevant times was a qualified accountant and a member of CPA Australia;
b. from 15 December 2017 to 9 February 2022 was a registered tax practitioner;
c. at all relevant times was a director and shareholder of EMIE;
d. at all relevant times was a director of SAD and at all relevant times from 27 August 2019 was a shareholder of SAD;
e. at all relevant times was a director, secretary and a shareholder of APFD;
f. from February 2004 to April 2018 was a director of BIC;
g. from 25 August 2017 to 1 November 2017 was a director, secretary and shareholder of PRED;
h. founded, and at all relevant times was a director and shareholder of, Onward Legal; and
i. has never been an "Australian legal practitioner" for the purposes of the Uniform Law.
2. At all relevant times Mr Lu was:
a. Onward Legal's sole Principal; and
b. an "Australian Legal Practitioner" for the purposes of the Uniform Law.
3. Mrs Ip was:
a. at all relevant times:
i. the Respondent's wife;
ii. the sole director and sole shareholder of THHM;
iii. a director and shareholder of BlC; and
b. at all relevant times from 1 November 2017 a director and shareholder of PRED.
4. At all relevant times Onward Legal was engaged to act for:
a. APFD in relation to its sale of units in the Botany Project; and
b. SAD in relation to its sale of units in the Pymble Project.
5. At all relevant times APFD engaged OS to carry out building work in relation to the Botany Project.
The Botany Project
6. In 2015 APFD engaged AR to sell units in the Botany Project.
7. On or about the following dates AR transferred to the ANZ Trust Account monies in the following amounts on account of deposits and interest that purchasers of units in the Botany Project had paid to AR:
Date Amount
15 May 2017 $2,835,037.35
23 May 2017 $475,496.79
13 June 2017 $181, 283.96
[5]
The contracts for sale for those units in the Botany Project relevantly provided:
a. that the purchaser was to pay the deposit to the depositholder (clause 2.1);
b. that, if each party told the depositholder that the deposit was to be invested, the depositholder was to invest the deposit (at the risk of the party who would become entitled to it) in an interest-bearing account payable at call (clause 2); and
c. that the deposit belonged to the vendor on completion (clause 16.10).
9. Between 1 and 6 June 2017, Onward Legal caused monies in the sum of $2,835,037.35 to be withdrawn from the ANZ Trust Account and deposited into the Controlled Money Accounts to be held for purchasers of units in the Botany Project referred to in paragraph 7 above.
10. The monies referred to in paragraphs 7 and 9 above were trust monies for the purposes of the section 129 of the Uniform Law.
11. The Respondent knew, or alternatively ought to have known in the circumstances that the monies referred to in paragraphs 7 and 9 above were trust monies for the purposes of section 129 of the Uniform Law.
12. On the following dates the Respondent caused the following amounts, which were in whole or in part, monies that Onward Legal held on trust for purchasers of units in the Botany Project referred to in paragraphs 7 and 9 above, to be withdrawn from the ANZ Trust Account and deposited into the First EMIE Account:
Date Amount
25 October 2018 $100.000.00
26 October 2018 $556,780.75
[6]
On 1 November 2018, the Respondent caused $2,742,272.51:
a. to be withdrawn from the Controlled Money Accounts referred to in paragraph 9 above and deposited into the ANZ Trust Account; and
b. to be withdrawn from the ANZ Trust Account and deposited into the First EMIE Account.
14. On the following dates the Respondent caused the following amounts to be withdrawn from the First EMIE Account and deposited into bank accounts in the name of the following entities and for the following purposes;
Date Entity Amount Reason
25 October 2018 PRED $10,000.00 Transfer to PRED as part of the council contributions for Parramatta Project
25 October 2018 THHM $10,877.06 Transfer to THHM as working capital in relation to the Tweed Heads Motel
25 October 2018 Goodwyn Legal Trust $25,000.00 Transfer to Goodwyn Legal Trust to reimburse the lender for payments it had made in relation to the Pymble Project and/or for Pymble Project finance, legal and construction due diligence carried out by the lender's solicitor
29 October 2018 Yan Chen $92,187.00 Transfer to Mr Yan Chen for migration service fees charged by him as contractor of EMIE
29 October 2018 OS $500,000.00 Transfer to OS to fund the Botany Project
30 October 2018 OS $19,557.29 Transfer to OS to fund the Botany Project
31 October 2018 BIC $12,000.00 Transfer to BIC to reimburse the Respondent for the payments that he had paid for the Botany Project
31 October 2018 PRED $20,000.00 Transfer to PRED as part of the council contributions for Parramatta Project
1 November 2018 OS $500,000.00 Transfer to OS to fund the Botany Project
1 November 2018 OS $1,900,000.00 Withdrawal for payment to OS to fund the Botany Project
2 November 2018 Respondent $22,960.47 Transfer to the Respondent's personal credit card account to reimburse him for the payments that he had paid for the Botany Project
2 November 2018 EMIE $320,000.00 Transfer to the Second EMIE Account to reimburse the Respondent for payments that he had made to the Botany Project
2 November 2018 Goodwyn Legal Trust $14,390.00 Transfer to Goodwyn Legal Trust, to reimburse the lender for payments they had made in relation to the Pymble Project and/or as for Pymble Project finance, legal and construction due diligence carried out by the lender's solicitor.
[7]
The Respondent had the following interests in respect of the transactions referred to in paragraphs 12 to 14 above:
a. the Respondent was a director and shareholder of EMIE;
b. the Respondent was a director and shareholder of APFD;
c. the Respondent was a director of SAD;
d. some of the transfers were made to EMIE so that it could repay money to the Respondent; and
e. the Respondent's wife was a director and shareholder of PRED, BIC and THHM.
16. Immediately prior to the transactions referred to in paragraphs 12 to 14 above, the First EMIE Account had a credit balance of $46,536.82.
17. After the withdrawals made on 2 November 2018 referred to in paragraph 14 above the First EMIE Account had a credit balance of $28,139.42.
18. When the Respondent caused the withdrawals and deposits referred to in paragraphs 12 to 14 above to be made:
a. the purchasers for whom Onward Legal held on trust the monies referred to above had not authorised any of the withdrawals or deposits to be made; and
b. settlement in relation to the units for which the deposits referred to above were paid had not taken place.
19. Between 28 November 2019 to 23 January 2020, the Respondent caused the monies that Onward Legal held on trust for purchasers of units in the Botany Project referred to in paragraph 9 above to be paid back into the ANZ Trust Account.
The Pymble Project
20. Around 2015 SAD engaged SRG to sell units in the Pymble Project.
21. The terms of the contracts for sale for the units at the Pymble Project included the terms referred to above at paragraph 8.
22. As at 4 July 2017, Onward Legal held the sum of $2,401,351.03 on behalf of purchasers of units in the Pymble Project in the ANZ Trust Account.
23. As at 14 July 2017, Onward Legal held the additional sum of $237,051,03 on behalf of purchasers of units in the Pymble Project in the Westpac Trust Account.
24. The monies referred to in paragraphs 22 to 23 above, totalling $2,401,351.03, were trust monies for the purposes of section 129 of the Uniform Law.
25. The Respondent knew, or alternatively ought to have known in the circumstances, that the monies referred to in paragraph 22 above were trust monies for the purposes of section 129 of the Uniform Law.
26. On 4 July 2017, the Respondent caused monies in the sum of approximately $2,401,351.03 to be withdrawn from the ANZ Trust Account and deposited into the Westpac Trust Account.
27. From 11 to 12 July 2017, the Respondent caused monies in the sum of approximately $2,392,300.00 to be withdrawn from the Westpac Trust Account and deposited into Controlled Money Accounts to be held for purchasers of units in the Pymble Project.
28. On 10 January 2018, the Respondent caused monies in the sum of $2,409,124.80 (being the total of $2,392,300.00 plus interest) to be withdrawn from the Controlled Money Accounts and deposited into the Westpac Cash Account, which was not a trust money account operated by Onward Legal.
29. On 16 February 2018, the Respondent caused the following monies, which were, in whole or in part, monies that Onward Legal held on trust for purchasers of units in the Pymble Project referred to in paragraph 22 above, to be withdrawn from the following bank accounts and to be deposited into the ANZ Trust Account:
Amount Account
$2,409,124.80 Westpac Cash Account
$237,051.03 Westpac Trust Account
[8]
On 5 June 2018, the Respondent caused monies in the sum of approximately $2,676,394.35 to be withdrawn from the ANZ Trust Account and deposited into Controlled Money Accounts to be held for purchasers of units in the Pymble Project.
31. On 6 December 2019, the Respondent caused monies in the sum of approximately $2,626,707.78 to be withdrawn from the Controlled Money Accounts referred to in paragraph 30 above and deposited into the ANZ Savings Account, which was not a trust money account operated by Onward Legal.
32. On 17 December 2019, the Respondent caused monies in the sum of approximately $2,626,707.78 to be withdrawn from the ANZ Savings Account and deposited into the First EMIE Account.
33. Immediately before the deposit referred to in paragraph 32 above the First EMlE Account had a balance of $19,385.85.
34. Between 17 December 2019 and 23 January 2020 the Respondent caused monies to be withdrawn from the First EMIE Account so that, as at 23 January 2020 the First EMIE Account had a balance of $20,392.38.
35. On around 9 April 2020, the Respondent caused $2,186,690.00 of the $2,626,707.78 referred to in paragraph 32 above to be used to restore deficiencies in the ANZ Trust Account which arose in relation to the Botany Project.
36. The Respondent had an interest in the Botany Project as a director and shareholder of APFD.
37. When the Respondent caused the withdrawals and deposits referred to in paragraphs 28 to 35 above:
a. at no time did any purchaser for whom Onward Legal held the money authorise any of the withdrawals or deposits to be made and
b. settlement in relation to the units in respect of which the money was held had not taken place.
We find that the conduct alleged against Mr Ip has been conceded and has been established on the balance of probabilities, which is the requisite standard of proof. There is no evidence to the contrary.
[9]
Characterisation of Mr Ip's conduct
In paragraph 19 of Attachment A to the Application, it is alleged that the transactions set out in paragraphs 12 to 14 of that attachment (which are also paragraphs 12 to 14 of the Statement of Agreed Facts, above), constituted a breach of trust by Onward Legal in respect of the trust money it held and a contravention by Onward Legal of ss 138, 139, 145 and 146 of the Uniform Law.
Mr Ip concedes this characterisation of the transactions in his Reply.
There is no doubt that the money the subject of the transactions set out in paragraphs 12, 13 and 14 of the Application and the Statement of Agreed Facts was trust money as defined in s 129(1) of the Uniform Law. It was also controlled money, held initially by Onward Legal in a controlled money account.
Mr Ip has admitted that he either knew or should have known that the money was trust money. The money was held in trust by Onward Legal for purchasers of units in the Botany Project. It was a series of deposits paid under contracts for the sale and purchase of units in the Botany Project.
The trust money was transferred by Mr Ip from the controlled money account into the ANZ Trust Account and then into the first EMIE Account. It was then paid out by Mr Ip as set out in paragraph 16 of Attachment A to the Application and the Statement of Agreed Facts.
Plainly, the purpose of the payment out of the money taken from the controlled money account was to pay expenses associated with the Botany Project, expenses associated with the Pymble Project and other expenses of EMIE, including the repayment to Mr Ip of payments he had made from his personal funds on behalf of EMIE, of which he was a director and shareholder.
The Botany Project purchasers to whom the trust money belonged had not authorised the transfers made by Mr Ip. Settlement on the contracts under which the deposits had been paid had not taken place.
The transfer of the trust money from the ANZ trust account to the First EMIE Account and the further transfers set out in paragraph 16 of Attachment A to the Application and the Statement of Agreed Facts were breaches of trust by Onward Legal, brought about by Mr Ip.
Those transactions were in breach of s 138(1) of the Uniform Law by Onward Legal, also brought about by Mr Ip because Onward Legal failed to hold trust money in its trust account exclusively for the person on whose behalf it is received.
Those transactions were in breach of s 139(2) of the Uniform Law by Onward Legal, also brought about by Mr Ip because Onward Legal failed to hold controlled money in a controlled money account exclusively for the person on whose behalf it was received.
The payment to Mr Ip's personal credit card of $22,960.47 on 2 November 2018, reimbursed him for payments he had made on that credit card for the Botany Project. The payment was a breach of s 145(1) of the Uniform Law, which says that money in a trust account maintained by a law practice is not available for the payment of debts of the law practice or any of its associates.
The payment of the trust money into the First EMIE account intermixed the money with existing funds of EMIE which were in the account, and Onward Legal was therefore in breach of s 146 of the Uniform Law. Mr Ip caused this breach.
In paragraph 38 of Attachment A to the Application, it is alleged that the transactions set out in paragraphs 28 to 35 of that attachment (which are also paragraphs 28 to 35 of the Statement of Agreed Facts, above), constituted a breach of trust by Onward Legal in respect of the trust money it held and a contravention by Onward Legal of ss 138,139, 145 and 146 of the Uniform Law.
Mr Ip concedes the breaches alleged and set out in [31] above.
We find that the money referred to in paragraphs 22 and 23 of Attachment A to the Application and the Statement of Agreed Facts was trust money.
Mr Ip has admitted that he knew or ought to have known that that money was trust money. The money belonged to purchasers of units in the Pymble Project. It was a series of deposits paid under contracts for the sale and purchase of units in the Pymble Project. Settlement of the units in the Pymble Project had not taken place at the time of the transactions set out in paragraphs 28 to 35 of Attachment A to the Application and the Statement of Agreed Facts.
The transactions set out in paragraphs 28 to 35 of Attachment A to the Application and the Statement of Agreed Facts were made without the authorisation of the people for whom the money was held by Onward Legal. The transfers were a breach of trust by Onward Legal, brought about by Mr Ip.
On account of Mr Ip's actions, Onward Legal breached s 138(1) of the Uniform Law by failing to hold trust money in its trust account exclusively for the person on whose behalf it is received. $2,626,707.78 held for the purchasers of units in the Pymble Project was paid out to EMIE.
Onward Legal also breached s 139(2) of the Uniform Law by failing to hold controlled money in a controlled money account exclusively for the person on whose behalf it was received.
Mr Ip caused some of the money taken from the Pymble Project trust money and eventually deposited in the First EMIE Account to be used to restore deficiencies in the ANZ Trust Account which arose because of the misuse by Onward Legal of the trust money and controlled money paid by purchasers of units in the Botany Project. In doing so, he caused Onward Legal to breach s 145 of the Uniform Law.
Onward Legal breached s 146 of the Uniform Law as the trust money was mixed with other money in the Westpac Cash account and in the First EMIE account. Mr Ip caused that breach.
[10]
Unsatisfactory professional conduct and professional misconduct
In characterising Mr Ip's conduct, we bear in mind the agreed fact that the trust money relating to both the Botany Project and the Pymble Project was eventually repaid to the trust accounts. However, the transactions which Mr Ip caused to be made exposed the money to risk, which is inconsistent with the expectations of the public of legal practices and trust accounts. We also bear in mind the statement of Hope JA (Reynolds JA and Hutley JA agreeing) in Law Society of New South Wales v Moulton [1981] 2 NSWLR 736 at 740:
…it would seem necessary also to restate what has been pointed out before, that in considering whether a solicitor has been guilty of professional misconduct in a dealing with a client, and in considering the gravity of that misconduct, the fact that the client, in the ultimate event, suffers no loss is of little, if any, relevance. If the acts or omissions of a solicitor constitute professional misconduct, they do so at the time when they occur. Their character is not changed by the fact that subsequently a loss, or no loss, is sustained.
Mr Ip's conduct was both a substantial and a consistent failure to maintain a reasonable standard of competence and diligence that the public is entitled to expect of a reasonably competent lawyer in conduct occurring in connection with the practice of the law (see ss 296 and 297(1)(a) of the Uniform Law). The importance of a law practice complying with its obligations with respect to trust funds was described by Ipp JA (Tobias JA and Stein AJA agreeing) in Barwick v Council of the Law Society of New South Wales [2004] NSWCA 32 at [118] in the following way:
118 …The trust and confidence which clients place in their solicitors are a basic element of the administration of justice in this country. Violations by legal practitioners of trust accounts betray that trust and harm public confidence in the legal system. This explains the sacrosanct nature of trust accounts and the acute concern that courts have when practitioners, in breach of their fiduciary obligations, misuse trust moneys for their own benefit …
It was conceded that Mr Ip's conduct showed that he was not a fit and proper person to be employed or paid in connection with the practice of law or to be involved in the management of a law practice. The Court of Appeal said, in relation to s 297(1)(b) of the Uniform Law, in Council of the New South Wales Bar Association v EFA [2021] NSWCA 339 at [158]:
158. …As the judgment of Kitto J in Ziems demonstrates, the issue of fitness encompasses more than mere conduct. The "fit and proper person" test is directed to character, which may be determined by conduct alone, but which may also take into account other circumstances.
Mr Ip's dealings with the trust money were dealings to further his own financial interest. In putting trust money at risk, Mr Ip prioritised his own financial interests over the interests of the clients of Onward Legal in circumstances where his ethical duties to the clients were in conflict with that conduct. His conduct, in context, shows that his character is such that he is not a fit and proper person to be employed or paid in connection with the practice of law or to be involved in the management of a law practice.
Had Mr Ip been a legal practitioner, his conduct would have amounted to both unsatisfactory professional conduct and professional misconduct.
We acknowledge that Mr Ip conceded the facts and the characterisation of his conduct at the earliest opportunity. We acknowledge that he agreed to the orders sought by the Council. Prior to the matters the subject of the Application, Mr Ip had been a lay associate for 10 years. We acknowledge that Mr Ip co-operated with the investigation, assisted with the preparation of the Agreed Statement of Facts and has unreservedly accepted responsibility for his conduct.
We take into account the seriousness of Mr Ip's conduct. We take into account the need to maintain public confidence in the legal practices of New South Wales. We bear in mind the need to denounce Mr Ip's conduct for the purpose of the deterrence of others involved in legal practice, whether as a lay associate or as a solicitor, from behaving in a like manner.
In all of the circumstances, an indefinite disqualification of Mr Ip under s 119(1) of the Uniform Law is appropriate.
[11]
Order
1. Eric Shu-Wah Ip is disqualified indefinitely under s 119(1) of the Legal Profession Uniform Law (NSW) from acting as a lay associate or associate.
[12]
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
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Decision last updated: 30 October 2023